Want to keep calm? Want to check out the daily surf report in Southern California? Need a recipe for tonight’s dinner? An app for all of the above is a just a click away and there are a staggering 1.5 million apps available in Apple’s App Store. The digital world has indeed reshaped the nature of our modern-day life. But for Millennials, it is the only life they have ever known. In the life of Millennial, technology has always been king.
80 million strong can certainly bring some serious buying power. Researchers at Barkley estimate that Millennials control $200 billion of direct purchasing power; they also wield influence over $500 billion in spending done by their parents and grandparents.
“Born between the years of 1981-2005, 80 million Millennials have been raised almost entirely in the Internet and digital media age. This has impacted the toys they’ve played with, and the communications norms they adopted, including blogs, online videos, email and social media. Technology isn’t just a tool one uses to navigate the world for a millennial; it is their world.”
Millennials are definitely the financial powerhouse of the future. This generation, with its oldest members just 34 years old, will reach their peak earning potential in 2020, and by 2025, are expected to generate 46% of all U.S. income.
Millenials Turn Traditional Payments Upside Down
Pair the millennial buying power with their tech-savvy lifestyle, and you see that this generation is a strong supporter of new payment technology, while shunning more “traditional” payments. Millennials are using technology instead of the tried and true banking methods – 86% of Millennials age 25-34 use smartphones and online is favored.
A Millennial going to a bank to cash a check or even to the ATM? Forget about it.
“Many Millennials would never think of ducking into a bank branch to take care of their financial needs, or even writing out a check. More than a fifth of all Millennials have never even written a physical check to pay a bill. 63% of adult Millennials don’t even have a credit card. By comparison, only 35% of consumers over 30 don’t have credit cards. It’s no surprise that 94% of consumers under 35 years old are active users of online banking. Another 27% would consider a branchless digital bank.”
To Millennials, a bank is merely a transactional relationship via their smartphone. They are now using apps and mobile tools to pay bills, view their statements and transaction history, and set up automated recurring payments. In fact, according to First Data, 94% of consumers under 35 are active users of online banking, 33% believe they won’t need a bank in five years, and an additional 33% would switch banks within the next 90 days. To say that Millennials want convenience, instant gratification and a digital experience rather than personal communication with their bank would be the understatement of the Millennium.
Are Millennials Thinking about Payment Security?
With all this talk about convenience and instant gratification with mobile banking in this millennial age, there lies a question – do Millennials care about payment security?
In a recent ISACA survey, 87% of 900 cybersecurity experts interviewed expect to see an increase in mobile payment data breaches. The ISACA went on to list the major vulnerabilities mobile payments will face – stolen devices, phishing attacks, user error – and mentioned several effective ways for consumers to make mobile payments more secure.
“Millennials recognize that there are security questions that arise when you live on your phone. According to a Deloitte Center for Financial Services report, 54% of consumers under 35 years old are concerned about the security of mobile devices for banking purposes. In other words, unsecure payments does not bring instant gratification, so banks and payment apps that want to attract and keep Millennials need to have a secure payment network.”
Others argue that Millennials have grown up in a world of ‘data everywhere’, putting their trust in technology easily while not being educated or conditioned on the importance of protecting their data.
Whatever the stance on payment security, awareness will become eminent for everyone. Whether it is because of the increased vulnerabilities resulting in data breaches or from the Millennial’s buying power making a statement on the importance of secure payment technology, the underlying message is that payment data needs to be secure.
In an interesting twist, the Millennial shift to mobile payments has exposed some vulnerabilities in payment security.
“Millennials link everything from financial accounts to very personal information from social media apps everywhere, on every device,” said Tom Bain, Vice President of Security Strategy at CounterTack. “Sixty percent of all mobile attacks are capable of stealing money from Millennials,” he said, noting that mobile attacks globally are growing by a factor of 10 every quarter. So the more data that is available, mostly on mobile apps and devices, the better the opportunity for hackers to hack individuals and ride those coattails into corporate networks freely.”
A Perfect World = Instant Security and Millennial Instant Gratification
Payment security and the convenience of mobile payments can co-exist, and there are technologies such as PCI-validated Point-to-Point Encryption (P2PE) that can ensure that payment data is secure – especially in mobile payments. But key will be to ensure security is seamless and does not disrupt the payment experience for the Millennial. Because after all, while they love technology, they don’t want any extra work to get it.
It’s definitely going to be a new payment frontier.